L01-3 EXERCISE 1.3 What Is Financial Reporting? A major focus of this course is the process of financial reporting. a. What is meant by the term financial reporting? b. What are the principal accounting reports involved in the financial reporting process? In general terms, what is the purpose of these reports? c. Do all business entities engage in financial reporting? Explain. d. How does society benefit from the financial reporting process? LO1-5 EXERCISE 1.4 Generally Accepted Accounting Principles Generally accepted accounting principles play an important role in financial reporting, a. What is meant by the phrase generally accepted accounting principles? b. What are the major sources of these principles? c. Is there a single comprehensive list of generally accepted accounting principles? Explain. d. What types of accounting reports are prepared in conformity with generally accepted account ing principles? L01-5 EXERCISE 1.12 Audits of financial statements are an important part of the accounting process to ensure integrity in financial reporting. 2. What is the purpose of an audit? h. As an external user of accounting information, what meaning would you attach to an audit that concludes that the financial statements are fairly presented in conformity with generally accepted accounting principles? Would your interest in investing in this same company be affected by an auditor's report that concluded the financial statements were not fairly presented? Why or why not